The Indicator from Planet Money - Egg Prices: States Cry Foul

The price of eggs skyrocketed at the start of the pandemic. That has some people crying foul ... and filing suit.

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Content Keywords: Scott Horsley eggs omelette burner
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NPR

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All right, I Stacy Scott. How are you? I'm good. I'm in the kitchen Scott Horsley is NPR Chief economics correspondent? And from what I understand you are about to make a dish that you are making a lot these days making more of than I certainly haven't in days past and and that's an omelette omelette burner there oil in the pan. And of course this is going to be a full episode of this isn't it in about 5 dozen eggs in the last several months, which is definitely more eggs than I would eat in a normal. Are some good reasons for this extreme. Oh my God, no more food at home cooking for ourselves and one reason.

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Eggs are in demand is you know, eggs are a good cheap source of protein at and for a lot of folks they were a substitute for even more expensive kind of protein like beef or chicken that might have been hard to get during the pandemic they keep pretty well. They're not that hard to cook. You know, you're even even if you're up slowed like me you can make it free. I pretty attractive omelette.

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In the spring the price of eggs went way up right along with their popularity prices of settle down a little since then but now a bunch of states are suing egg companies saying they took advantage of the pandemic egg craze and start price gouging customers. This is indicator from Planet Money. I'm Stacey Vanek Smith, and I'm Carlos Garcia on the show eggs kind of a wild ride price rationing stockpiling Nationwide shortages. It's also extreme

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Yeah, I know. I didn't show what this all tells us about eggs and about the country's food supply also.

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We may have talked too long. I might have gotten the stove little hotter than I meant to but that's alright.

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This message comes from NPR sponsor Microsoft. The world has changed and Microsoft teams is there to help us stay connected teams is the safe and secure way to chat meet call and collaborate to learn more visit microsoft.com teams Support also comes from fundrise fundrise makes it easy for anyone to invest in high-quality real estate by building you a portfolio with there more than 1 billion dollars in assets get started at Sunrise. Com indicator to have your first 90 days of advisory fees waived. We eat a lot of eggs in this country the average American eats almost an egg a day during the pandemic. We really got excited about eggs grocery stores were ordering six times more eggs than normal and a lot of store shelves were still empty so much so that a lot of places started limiting how many eggs you could buy at a time so I could not increase right away because they're only so many eggs.

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Hands in the US and if you want more eggs, you have to raise more hens and the new hens don't lay eggs right away. It takes about 4 months for a chicken to start laying eggs. And that is part of why store shelves were empty. Yes, and there was a spike in demand, but there was fixed Supply economics 101 tells us that that would push up the price and the price went way up nearly 200% in March before a sale price of a dozen eggs in the US was under a dollar. $0.95 and in March and April the price of eggs just spiked and Scott Horsley reporter extraordinaire that he is saved a grocery receipt went back through and checked what he been paying. I've been going back through my receipt back in May. I bought some eggs at Safeway that were 499. I think that was the most expensive eggs. I bought during the pandemic

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Country that is more than quadruple what eggs cost before the pandemic? I know a bunch of states have responded by suing egg companies for price gouging these states included, Texas West Virginia in Minnesota, and they also included New York where they attorney general accused and Company Hillandale Farms of taking in 4 million dollars in revenues from overcharging people 4x gas and the eggs is a theory really cheap source of protein. They don't go bad very fast. So a lot of people in really bad economic situation we're counting on eggs to feed their families like stocking up on them keeping them cooking them to survive and New York is hosting the egg companies took this moment of panic buying and that they profited off of like the most vulnerable people in the state and the Egg producers defended themselves by citing economics. If you got a 345 fold increase in demand, it's totally understandable that the price goes up and I think that's what this this case word of illustrates is

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You know, the Attorney General is accusing this company of violating the laws of New York, but their behavior is completely consistent with the law of supply and demand which is when demand spikes and Supply is fixed. The price is going to soar.

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and then of course the real

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challenges to flip

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Will you know I'm I may have misspoken this this may be a kind of a masterpiece here. Maybe that real hot pan was a plus. I mean did a company's commit a crime by charging more for eggs, or they just being good free market citizens answer this we decided to leave Scott and his omelette for a minute to talk with food Economist David Ortega. He's based out of Michigan State University. What is the difference between reacting to supply and demand and price gouging well, so purposefully set the price of a commodity, you know, significantly above what the traditional price level that incorporates cost and other forces are for a company's to labor transport supplies were all hard to get an option expensive in the early days of the pandemic. Also a lot of it companies produce Big Flats of eggs for restaurants.

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Restaurants are not really buying eggs so much anymore. So the egg producers had to Pivot and put eggs into smaller packages for grocery stores. And that meant new machines investing in new egg cartons. David says it is early days, but there is evidence that many egg makers didn't actually make a bigger profit off of their higher prices. The higher prices were just going towards paying the higher cost. The egg producers had but did those cost go up by three or four hundred percent like their prices did that is the question being hashed out in court now and it's kind of complicated issue here, of course is the egg itself, right? I mean if Ice Cream prices are caviar prices are wine prices with me like that went up by 200% It probably wouldn't be a legal issue a price gouging accusation. But the idea here is the eggs are a staple and its people that really vulnerable people count on especially in a crisis and his idea that companies were profiting off of vulnerable people in time of Crisis makes it seem kind of wrong them Jose. It's especially tricky here.

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Because there was a time when pretty much all food prices were going up. In fact between March and April food prices saw their biggest jump in 46 years. Yes and things to settle down but we are still paying more for food and eggs than we were in January and David thinks this will continue until the pandemic is totally under control. But David ads that this whole thing is made him realize something which is just how strong and resilient the US food supply is that record spike in food prices the biggest one and almost 50 years. It was 2.6% That's it. And that is today's indicator. By the way 2.6% This is sort of the largest shark that we've seen or any of us have experience in our lifetimes. You not only to the food supply but you know society and in our way of living and you know, we still go to the grocery store in motor scooter available.

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Out a prices and whether it was price gouging or just you know, Fair economics or may be unfair but legal economics and meanwhile economics has been slowly solving the problem when I prices went really high in March chicken Farmers raised more hens and those hens have just started laying eggs, which means it's supply of eggs will increase and that will help with prices to that is basic economics at work. Meanwhile, Scott Horsley are omelet maker extraordinaire says whatever happens to the prices or nearly whatever his weekly omelette is probably just going to be baked into his schedule now and he says it's like he's really gotten some skills in all these months of like weekly omelettes to put some cheese in the middle here.

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where to get a little salsa on top

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Yeah, that's well worth 2/12 of $3.99.

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This episode of the indicator was produced by Nick Fountain fact-checked by Brittany Cronin the indicators edited by Patty Hirsch and is a production of NPR.
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